June 2004

American Ingenuity At Work:

IP Contact Centers + Home Agents = Cost Parity With Offshore

BY NADJI TEHRANI

IP Contact Center And Home Agent Technology And Management

Background And A Review Of Offshore Outsourcing

In recent years, offshore outsourcing gained popularity for two reasons, as follows:

a. Extremely low labor costs,
b. High level of education of the available labor.
The combination of the above has created significant offshoring of teleservices to several countries such as India, the Philippines, Indonesia, South America, Europe, Canada and elsewhere.

On the other hand, the American economy, which is best described as a 'jobless recovery,' was heavily blamed by many for jobs going offshore to the above countries. Indeed, a significant portion of all offshore teleservices is done by U.S.-owned companies. In fact, the following are the statistics:

U.S.-Owned Companies Lead The Way In Offshoring

At the recently held 'Global Call Center Outsourcing Summit'' (GCCOS) conference, which featured 'National Offshore Outsourcing Debate,' considerable information on the subject was presented to the attendees. The following represents excerpts from my presentation at the well attended GCCOS conference. These numbers are derived from analysis of the companies ranked in the 19th-Annual Top 50 Teleservices Agencies Ranking.

' 35 percent of international offshore OUTBOUND is generated by U.S.-based companies,
' 65 percent of international INBOUND is generated by U.S.-based companies,
' International call centers are located in 22 countries worldwide,
' 9 percent of teleservices agencies currently use home agents,
' 34 percent of U.S.-based agencies have both domestic and international operations,
' Average number of call centers per company: 12.76,
' The U.S. interactive inbound growth rate from 2003 to 2004 is +4.8 percent.
At the same time, offshore outsourcing has been growing in the vicinity of 25 percent growth per year. Not too long ago, i.e., the year 2000 and prior, outsourcing in this country was also growing at an average of 27 percent per year.

 
All of the above developments have really created major national debate on offshore outsourcing. In the Online Exclusive sidebar (www.cismag.com/0704/posidebar.htm), we have gathered complete information about the views of many leading politicians as well as dozens of proposals for anti-offshore outsourcing legislation that have been proposed.

The West Solution To Offshoring And Making Domestic Teleservices Competitive With Offshore Teleservices

West Corporation has recently developed a complete and revolutionary solution to take teleservices outsourcing to the next level.

About West Corporation's Leadership And Industry Reputation

Those of you who know West Corporation's impeccable reputation for integrity, quality and leadership know that West Corporation literally does not need an introduction. However, for those of you who may not be familiar with West Corporation, I would like to share with you the following:

Back in 1982, shortly after we launched this publication, which laid the foundation for the current multibillion dollar contact center, CRM, teleservices outsourcing business, I visited a number of call centers, telemarketing and teleservices companies, including the pioneering team that would later found West Corporation in 1986. I had the great pleasure and honor of meeting with two of the elite pioneers of teleservices in America; namely, Gary West and Mary West. I spent several days with these industry leaders, and they were gracious enough to train me and teach me practically everything about telemarketing, call centers, teleservices and contact centers. The above persons are indeed among the legendary leaders of our industry. They used their valuable time and trained me for several days. To this day, I have nothing but respect and admiration for the integrity and commitment to excellence, quality and the great Midwestern work ethic that they all exemplified and that is instilled in the company they founded 18 years ago.

Having had my hand on the pulse of the industry since 1982, I have heard nothing but the greatest possible testimonials about West's reputation and to use the words of Jack Nicholson, West is 'as good as it gets'!

Having said that, I was honored to learn of West's new leadership solution dealing with home agents as far back as last October, and was surprised to learn that West has been routing calls to home agents for the past eight years. I am also pleased to share with you some of the highlights of what West has done to take our industry to the next level. I have spent considerable time discussing with West's senior management and reading about their new home agent solution. Here are some of the highlights and the benefits of their home agent program:

' Exceptional Scalability
' Agent Flexibility
' West's Industry Experience ' West has been a leader in the outsourced customer care business since 1986.
' Higher quality agents: 75 percent of West's home agents have some college education. Ninety-two percent have some post-high school education.
' Excellent alternative to 'offshoring' ' According to West Corporation, not only are home agents less expensive than traditional call center agents, they provide superior levels of customer service. And it provides the kind of flexible work schedules that agents crave, particularly students and stay-at-home moms, or people who have other part-time jobs.
' Eliminates geographic barriers ' West is able to draw from its thousands of active home agents across the country to find specific skill sets in any industry (healthcare, real estate, technology, etc.).
' Rapid recruiting ' West has over 2,500 agents working now, and many hundreds more on a waiting list. Active agents can be notified of a new assignment within minutes, and new agents can be recruited, screened and trained within weeks.
' Built-in motivation ' Home agents are compensated on a per-minute basis. Whether the customer's criteria are one-call resolution, conversion rates or satisfaction levels, West's technology constantly monitors agent performance and routes more calls to the best performing agents in real-time. This creates a 'win-win' situation for both the customer and the agent.
' Never miss a call: West's front-end capacity and complete system redundancy essentially eliminates busy signals and long wait times.
' Available as a hosted solution ' West's VACD (virtual ACD) platform makes it possible for companies to manage their own agents. This is perfect for companies who want to continue managing their own call centers, but want the flexibility and scalability of West's home agent technology.

For more information about West's pioneering at-home concept, please contact Mark Frei at 402-963-1365 or e-mail him at mafrei@west.com.

Having said the above, it should be abundantly clear that the home agent concept is indeed significantly more cost-efficient than traditional methods of doing business while using TSRs who are substantially more educated than traditional ones.

The Benefits Of IP Contact Centers

As I indicated in my column in the April 2004 issue, IP contact centers offer a considerable amount of benefits, not the least of which is 70 to 90 percent cost savings in your telecommunications expenses. To refresh your memory, here are some excerpts from my comments in that editorial:

' Time To Converge ' From our vantage point, we feel that now is the time for IP telephony and contact center technology to converge because there is NO other choice if you want to compete profitably!
' Some Benefits: Marriage Made In Heaven ' Call centers are by far the biggest users of telecom. The Top 100 teleservices agencies alone use in excess of 30 billion billable minutes. Considering that teleservices represent only a small fraction of worldwide in-house CRM, contact center and customer interaction centers, then the worldwide consumption can be roughly estimated to be about 3 trillion minutes. As such, savvy call center management MUST plan to adopt the new Internet telephony technology.
' Huge Cost Savings ' A recent article in BusinessWeek estimated that from 70 to 90 percent cost savings can be realized from adopting IP telephony, to say nothing about other unparalleled advantages. Today, IP telephony is being implemented in a variety of industries and for both cost savings and revenue-generating objectives.

The bottom line is that, by integrating the synergy of using American innovation and experience with IP contact centers, we would be able to provide cost parity with offshoring.

I invite you to read  an interview with Mark Frei, Senior VP of West Corporation, which provides you with additional information on this truly unique and much needed concept.

The Key To Success
I would like to reiterate that the keys to the success of the home agent process are as follows:
1. Having the technology and the sophisticated networking capability to monitor each and every TSR's activity.
2. The ability to manage and control the quality of jobs performed by ALL home agents. If this step is not fully controlled with zero-tolerance for mistakes, in my opinion, this project will not work.

As I have studied the West process, I have come to the conclusion that the West home agent program has addressed all of our concerns.
We congratulate West Corporation for playing a leading role and taking our industry to the next level. As always, I welcome all of your comments. You may e-mail me at ntehrani@tmcnet.com.

Sincerely Yours:
Nadji Tehrani
Executive Group Publisher
Editor-in-Chief
ntehrani@tmcnet.com

Editor's Note: To get the complete picture, we strongly urge you to read the Publisher's Outlook as well as other related articles written in the last 12 issues of Customer Inter@ction Solutions' magazine.
 
Acknowledgment: This publication gratefully acknowledges significant and valued contributions made by the following in the development and research for this editorial:
' Mike Faulkner, Senior Vice
President of the DMA
' Mark Frei, Senior Vice President,
West Corporation
' Mack McKenzie, Vice President of
Marketing, West Corporation
' Mac McNeer, Ashton Partners.
 
In addition, I am also gratefully acknowledging significant assistance provided by the TMC staff including Tracey Schelmetic, Stephanie Menkes and Bill MacRae in preparation of this editorial.

Please be sure to read this article's Online Exclusive sidebar, which explains the current status of state and federal legislation and other concerns regarding offshoring. The sidebar is located on TMCnet.com at http://www.cismag.com/0704/posidebar.htm.

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